What ends a Hong Kong company's dormant status, and what are the risks?

How dormancy ends (s.5(5))

• The company passes a special resolution declaring that it intends to enter an accounting transaction, and the resolution is delivered to the Registrar; or
• There is an accounting transaction involving the company (paying a fee that the law requires the company to pay is disregarded).

Consequences (s.447(2))

• The audit exemption and the other relief in s.447(1) cease from the date of the accounting transaction.
• Personal liability: every director (including a shadow director) and any member who knew, or ought to have known, about the transaction is personally liable for any debt or liability arising from that transaction.
• The company must again hold AGMs and deliver annual returns as normal, and appoint an auditor.

Practical points

• Treat the dormancy filing as a decision to stop all activity, not a way to pause audits during a slow period.
• If you intend to restart, deliver the "intention to transact" resolution first, so the exit from dormancy is orderly and documented.
• Check that no bank charges, subscriptions or other payments flow through the company account while dormant.

If the company will never trade again, deregistration or winding up may be a cleaner exit than staying dormant indefinitely.